A LOOK into the annual report of GCS!

Find your Firm’s Annual Report and Spreadsheet:

Website link to the Annual Reports for GCS - June 2011, June 2012 and June 2013:

http://www.gcs-group.com.au/investors/

(Scroll to the bottom of the website link to fine the PDF copy of the annual reports).

Read your Firm’s Annual Report: Identify clearly what your firm actually does:

From thoroughly reading the annual report for GCS for the year of 2013 I have identified the following;

Key Concepts:

Throughout the 2013 annual report for GCS and in particular the section written by the Chairman and Group Managing Director many key concepts. These key concepts involved not only the positive and negative financial aspects of the company, but reflection on the company’s involvement within their employees as well as the outside community (See points below).

Ø  GCS was awarded the $30m formwork and concrete placement for the new Midland Health Campus. This was seen as a major contract for the company, ensuring work for the company.

Ø  A huge achievement recognised was the expansion in their involvement in the West Oil and Gas Market, an industry that promises quite a thriving future for the company.

Ø  Reduced net debt to equity from 63% to 43%.

Ø  Development of a strong, solid foundation for the group (GCS)

Ø  Net Profit after tax = (FY12: $22.8m) (FY13: $15.3m)

Ø  GCS will enter the new financial year in excellent shape, a strengthened balance sheet, expanded presence, with the expectancy to make profit from current and upcoming operations, whilst affording to further improve company conditions

Ø  The board believes their core strength is diversification amongst their employees, and contracting and services they have to offer to the industry

Ø  Other achievements include their involvement in numerous local and regional events/charities that focus on encouraging a better lifestyle. Two charities that stood out to me were; Youth Focus and Movies by Burswood.

(See the link for further information on the charities: http://www.gcs-group.com.au/community/)

 

Key Challenges the firm is facing and how they are overcoming these challenges:

 

GCS doesn’t appear to have many challenges in the company; however in the

financial year of 2013 the business of GCS was deeply affected by the ‘uncertainty and unwillingness’ of clients. Most of you are probably aware of the financial struggles many companies as well as individuals were facing with the economic drop. This caused a slow in demand for GCS as clients didn’t want to invest money in a potential dead end, making no money

To overcome this challenge, GCS simply tried expanding their presence. This meant making themselves known in all industries, in particular those who would provide a promising economic stability for the company as well as the individuals that were involved in the company.

Obviously every company experiences difficulty with employees, whether it is their productivity or simply keeping everyone in the workplace happy. To minimise any problems for the employees of the company, GCS has a board in charge of recognising and managing risks within the staff. This helps recognise the needs of the people of the company, which enables a better understanding on how GCS can utilise the diversification of their employees – which makes for a happy work environment, and higher productivity/turnover.

What I think?

 

I personally think that during hardship GCS has the foundations and procedures in place to overcome challenges thrown its way. They are constantly finding ways to further improve GCS through developing a strong culture and sharing the values of the company with the employees as well as the broader community. From reading about and further understanding the company I believe that because GCS is forever changing and exploring new ways to improve, they will always be able to confront challenging situations, form affective strategies and come out the other side better.

 

Key Questions – things I don’t understand:

 

Ø  Throughout the report the acronym EBITDA was used frequently. For example: “A reconciliation of adjusted EBITDA to operating profit before income tax is provided as follows”.

First reading this I thought “I have NO idea what EBITDA means or stands for”

Ø  Another interesting thought I was curious about was why most annual reports included the remuneration of the employees (well the board of directors)? Is this necessary?

Ø  In the statement for profit and loss there was a term called ‘amortisation expense’ on page 57 of my 2013 annual report. What is this?

Ø  Although reading briefly about these terms can anyone ‘SIMPLY’ explain what subsidiaries and intangible assets are?

 

Ø  What are unsecured borrowings? What is the difference between unsecured and secured borrowings?